“When all companies are thinking about emerging technologies, there’s a danger that you will miss the boat without sufficient investment.”

Paul van Kessel Global IT Risk and Assurance Leader, EY

Share

As executives fine-tune their firms to perform better, operational agility remains central to surviving — and flourishing — in a volatile world economy.

Part of this fine-tuning focuses on bolstering productivity, where many companies think there is room for improvement. In mature markets, where companies face the most acute pressures over pricing and profitability, executives cite this as their second-biggest opportunity, ahead of growth in new markets.

Productivity is also a high priority in rapid-growth markets, ranked fourth overall.

A high priority for business is the need to make sure that decisions reached at the top level are actually implemented on the ground.

Improving the execution of strategy fell to fifth place in this year’s rankings, from the top slot in 2011. Mature market respondents still consider this well ahead of their peers in rapid-growth markets, putting it in fifth place as compared with last time.

IT investment, a crucial element of strategy implementation and overall performance, is seen as the sixth-greatest opportunity, and among the top five within mature markets.

A perennial challenge for those seeking to expand and innovate, the risk of managing talent and skills shortages fell to fifth overall, down from third.

Global optimization and the relocation of key function make the top 10 opportunities list for the first time. For multinational organizations trying to balance the desire for cost competitiveness in key markets, as well as growth in new markets, rethinking the cost and location of operations from a global perspective can deliver a range of opportunities.

What it all means for businesses

Operational agility can be achieved by those managers who can drive a net increase in productivity, either within process, tools and training or through supply chain flexibility. The most important lesson for companies is not to wait the downturn out. Instead they must be proactive in identifying the opportunities available to them, whether in IT, talent or relocation and optimization. Their success will depend on how innovative they are prepared to be.

To mitigate the risks and enable opportunities companies could:

Performance

Evaluate the end-to-end supply chain for potential risk hotspots and create a risk mitigation plan as part of the supply chain strategy.

Create a driver-based planning process to identify the key economic drivers for the business.

Evaluate the current cost structure against comparables and look for opportunities to streamline back office functions.

Define the roles and responsibilities to help guide staffing appropriately.

Build development plans and succession plans to ensure that the right people are in the right role.

Assess the systems and processes that are in place to support business.

Assess the information security functions (as well as their risk management and compliance functions) and enhance the effectiveness and efficiency of these functions (enhance maturity level, risk convergence).

Integrate IT services with the company's business operations, make it a part of the business organization, align KPIs (key performance indicators) and SLA (service level agreement) of their IT operations with the departments that IT supports.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.